By Jim Puzzanghera and Alejandro Lazo, Los Angeles Times -March 30, 2011
Reporting from Washington and Los Angeles—

Major banks may be forced to let severely delinquent homeowners sell their houses for less than the loan amounts owed as part of a broad settlement of federal and state investigations into botched foreclosure paperwork, according to government officials involved in the negotiations.

The requirement to allow so-called short sales would be in addition to forcing mortgage servicers to reduce the amount some homeowners owe on their loans, said two officials, who spoke on the condition of anonymity because negotiations are ongoing.

The goal of short sales would be twofold: provide a quicker and more economical way for banks to dispose of distressed real estate and to help stabilize the real estate market by clearing out a backlog of defaulted mortgages that are poised for foreclosure.

They would be used in situations in which borrowers were so underwater that the more costly and time-consuming process of foreclosure would seem to be the only option.

Read the full article here

MORTGAGE rates in 2010 were the lowest in six decades, but a recent and sustained increase may indicate that consumers can expect to pay more in the new year to buy or refinance a home.
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After hitting rock bottom in mid-November, fixed rates for 30-year mortgages, the most common type of home loan, have steadily risen.

With this year’s historically low rates, “there is a good chance that we have peaked, give or take a few basis points,” said HSH Associates, an independent publisher of mortgage and consumer loan information, in its most recent trends forecast. (One basis point is 0.01 percent.) According to Christopher J. Mayer, a senior vice dean and a professor of real estate, finance and economics at the Columbia University Business School, “The window of low rates could have left us.”

By Dec. 16, rates for a 30-year fixed loan rose for the fifth consecutive week, to 4.83 percent, up from 4.17 percent on Nov. 11, according to Freddie Mac, the government-controlled buyer of loans. Rates in the Northeast, which are often a tenth of a point or more above the national level, were on average the same as those across the nation. But by Thursday they had nudged downward, to 4.81 percent.

Mortgage rates typically track those of 10-year and 30-year Treasury and other government bonds. Yields, or interest rates, on those notes have been rising amid lender concerns that the White House’s deal with Congress on Dec. 7. to extend the Bush-era tax cuts and the Federal Reserve’s move in early November to buy back $600 billion in debt to stimulate economic growth will combine to fuel inflation and swell the budget deficit.

The 4.17 rate last month was the lowest since Freddie Mac began tracking rates in 1971 — as well as the lowest since World War II, according to Weiss Research, a financial analysis and publishing firm in Jupiter, Fla. The high point last year was 5.21 percent, in April.

So if you took out a 30-year fixed note for $400,000 at the recent 4.83 percent, you are paying $93 less per month than you would have in April — but nearly $157 more than you would have at the 4.17 percent benchmark.

Refinancing or buying a home is still more affordable, compared with the rates of 6 percent to 8 percent over most of this decade. (A table of historical rates is at http://www.freddiemac.com/pmms/pmms30.htm)

The Mortgage Bankers’ Association, a trade group, predicts that 30-year fixed rates will inch up to 5.1 percent by the end of 2011 and reach 5.7 percent in 2012. In a slightly more optimistic prognosis for homeowners or buyers, Frank E. Nothaft, the chief economist of Freddie Mac, wrote in an annual trend forecast on Dec. 6. that “while some rise in fixed-rates is expected, 30-year fixed-rate loans are likely to remain below 5 percent” throughout 2011.

Apart from rates, other factors may make it harder to buy or refinance a property in the coming year. Lenders of all stripes have significantly tightened their requirements and made it tougher than ever to qualify for a loan. And the real estate market is still depressed — only half of 109 housing economists polled in October by MacroMarkets, a financial technology company in Madison, N.J., expect housing prices to begin rising next year.

This year has been a boom time for refinancings — four out of every five single-family loan applications in 2010 was for a refinancing, according to Freddie Mac — and there is more demand yet to come from homeowners next year, Professor Mayer said.

If rates appear headed to rise later in 2011, it may be partly because of jitters about the effects on unemployment on the economy, said John Walsh, the president of Total Mortgage Services in Milford, Conn. Mr. Walsh said he thought the recent increase in rates was temporary. “We may come back down in the next 60 days or so,” he added.

A version of this article appeared in print on December 26, 2010, on page RE9 of the New York edition.

This post comes from a recent experience with a negotiator on a listing that I have had for about the past 70 days… The listing has had great activity, the property has tons of upgrades, and we have reduced the price on multiple occasions, yet still… no offers. The negotiator, time after time has made dramatic price adjustments, offered incentives to the buyer, and to the selling agent! What does he know about the market that the typical seller might not?

The reason that I’m sharing this with you is to better help you… in today’s market the savvy home-seller will need to take all aspects of the market into consideration, make quick decisions and maybe even go so far as offer incentives in order to secure the highest price possible in the least amount of time.

You may be asking yourself… but if I offer incentives, how will that yield me the highest price? Doesn’t that affect my bottom line? Well of course it does… however experience shows that the longer you wait to sell your home the less likely you are to achieve anywhere near your desired sales price or an inflated sales price. This has proven to be true, over and over again. In fact, most real estate marketing companies will show you a timeline graph that addresses this issue right up front when they provide you with a comprehensive analysis.

Right now, you are probably thinking or saying to yourself, yes but my home has this feature, and my home is located here and quite a few other comments and thoughts may be running rampant. Please gather them. Go ahead… I’ll wait.

Now, I will say this in the nicest, most authentic, loving way possible… The market doesn’t care if you are the nicest home, if your home has the best upgrades, the best location, or a specific amenity that you love that your neighbors don’t have… these are just items that enhance a homes ability to sell in a down or compromised market.

So again, I ask what does this mean to you?

In order to be in the game today, in our current market, you home will have to show well, be priced well, and you have to be in a position to make decisions based on facts and not on emotions.

You absolutely must align yourself with a skilled consultant, a focused negotiator and a person like me that has the ability to organize all the details of the transaction and see things from multiple perspectives. Then and only then, will you reach your desired outcome, your goals and the light at the end of your tunnel. If you are looking for a consultation or would like to discuss this further, simply leave a comment or give me a call. I will look forward to hearing from you.

If you are already on the market, I sincerely wish you well with your home sale!

Mortgage makers are going beyond tax returns and bank statements to determine whether you’re a good risk. They’re checking such things as where you have pizza delivered and where you shop online.

Reporting from Washington — That pizza you had delivered the other night could mean the difference between whether you are approved for a mortgage or rejected.

There’s a big stretch between making a house payment and paying for a pizza. But it’s not what you pay for carryout that matters, at least not in the eyes of lenders. It’s where the food was delivered.

Ordering takeout proves that you live where you say you do, and that helps lenders uncover the crook who claims to live in the property he is trying to refinance when he really lives hundreds of miles away. Or expose the 35-year-old who says he has a $1,200-a-month apartment when he really lives rent-free with Mom and Dad.

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When you order food online, you become part of a vast database that lenders might tap to help them determine whether you are a good risk. Moreover, all sorts of these data reservoirs exist, and none of them is off-limits to lenders who are coming off the worst financial debacle since the Great Depression.

“If the data is available and it can be obtained legally, I’m going to test it,” says Alex Santos, president of Digital Risk, an Orlando, Fla., analytics firm that works with lenders and investors to build better underwriting mousetraps. “If it is inexpensive and makes my credit model better, I’m going to use it.”

Digital Risk is just one of numerous risk-management companies that are continuously probing for ways to help clients quantify their risk, prevent fraud and otherwise ensure the quality of their loans. And they’re going to extraordinary lengths to do so.

For example, they might peek into your online-buying habits. After all, the reasoning goes, someone who buys his shirts from a Brooks Brothers catalog may have more disposable income than someone who shops at JCPenney.

“At least that’s a theory we can test,” Santos says. “We’re looking for any type of data source that you can plug into a computer. It takes only a month of trial and error to determine whether the information can help [determine credit risk] or not. We have a hypothesis, push a button, and the computer tells us whether the data is predictive or not.”

This sort of data mining goes way beyond your credit score, that financial snapshot that measures your ability and willingness to repay your debt. And, Santos says, “there’s a tremendous amount of this kind of analytics going on right now.”

Lenders are still checking credit histories, not just when you apply for a mortgage but also a second time a day or two before the loan closes. But your credit score — known as a FICO score for the name of the company that created the scoring formula — is now considered “too broad.” Consequently, it has moved down in the hierarchy of tests that lenders are using to make certain that someone isn’t hoodwinking them.

First and foremost, lenders are pulling copies of your tax returns directly from Uncle Sam.

Don’t be alarmed. You give the lender permission to do that when you sign Form 4506-T. The idea here is to make sure that you haven’t altered the copy of your last two years’ tax returns that you provided when you signed your loan application. Lenders want to know if you might have exaggerated how much you earned.

Form 4506-T isn’t new. But a few years ago, at the height of the housing-market bonanza when home loans were easy to come by, many lenders failed to use it. Now practically everyone is going straight to the federal tax collector to compare the returns you provided with those on file with the IRS.

Lenders also are going to great lengths to verify employment and assets. Not only are they calling the name and work number you provided on your application, but they also are seeking confirmation in writing from your employer about what you earn, your position and how long you’ve worked there.

It’s the same for your bank accounts. Rather than being satisfied solely with the copies of the bank statements you provided, lenders are going directly to your bank to secure another set of those statements to make sure the numbers line up.

Lenders are no longer taking the appraiser’s word for how much the property you want to buy or refinance is worth, either. Now, they are employing automated valuation models as a second line of defense to be certain the appraiser’s estimate is on the money.

Next in the line of defenses is your credit score, but not just the score pulled when you applied for the loan. Now, they are pulling a second score shortly before closing to make sure that you haven’t taken out a car loan, bought a houseful of furniture on credit or done something else that might change your ability to make your house payments.

Lenders also are searching for other undisclosed liabilities by running your Social Security number through a huge database known as Mortgage Electronic Registration Systems.

Since 1997, more than 63 million mortgages have been registered on the MERS tracking system, each with a distinct 18-digit identification number. So, if you have another mortgage that you “forgot” to tell your lender about, this check will probably find it.

Now, too, the most cautious lenders are digging into noncredit proprietary databases such as those maintained by Papa John’s or Victoria’s Secret. And nothing is out of the realm of possibility. The “only boundary,” says Digital Risk’s Santos, is whether information can be accessed legally.

As long as it does not distinguish between race, religion, age and other “protected” classes, anything is fair game.

Distributed by United Feature Syndicate.
Copyright © 2010, Los Angeles Times

Fitch Ratings Ltd. forecasts that most borrowers who get lower mortgage payments under a federal government program will default within 12 months.

Among those with loans that aren’t backed by any federal agency, the redefault rate within a year is likely to be 65% to 75% under the Obama administration’s Home Affordable Modification Program, or HAMP, according to a report to be released Wednesday by Fitch, a New York-based credit-rating firm. Almost all of those who got loan modifications have already defaulted once.

Diane Pendley, a managing director at Fitch, said the failure rate was likely to be high largely because most of these borrowers were mired in credit-card debt, car loans and other obligations.

The Treasury Department has said that among people who have been given loan modifications under HAMP, the median ratio of total debt payments to pretax income is still 64%. That often means little money is left over for food, clothing or such emergency expenses as medical care and car repairs.

“The borrower remains in a very high-risk situation,” Ms. Pendley said in an interview. “The other debts don’t go away.”

A Treasury official said HAMP “is making a real difference in the lives of hundreds of thousands of homeowners.” He said the government has reduced the risk of redefault by offering financial incentives to borrowers who remain current on loan payments.

Fitch based the redefault forecast on the performance of loans that were modified in the first quarter of 2009. Those modifications were done outside of HAMP, which took effect later in the year. But Ms. Pendley doesn’t expect a major difference between the results of HAMP modifications and those made under lenders’ programs.

Even if two-thirds of the loan modifications fail, Ms. Pendley said, that doesn’t mean HAMP is a failure. “If you can save one-third of the borrowers, I think it is worth the exercise,” she said. She also said the HAMP program, announced in early 2009, had provided a basic outline for loan servicers to follow in modifying loans. Loan servicers, often owned by banks, collect payments and handle foreclosures. Previously they were “all over the place” in their methods for dealing with foreclosures, Ms. Pendley said.

At the end of April, about 295,000 households were benefiting from long-term modifications under HAMP, which typically involves cutting the interest rate as low as 2%, according to the Treasury. Another 637,000 households were in trial modifications, under which they need to show they can make their new, lower payments consistently and provide documents proving they are eligible. Under the $50 billion HAMP program, the federal government provides financial incentives to borrowers, loan servicers and mortgage investors for modifying loans.

Andrew Jakabovics, an associate director at the Center for American Progress, a Washington think tank with ties to the Obama administration, said results of HAMP so far were mixed. Borrowers continue to complain that it often takes months, and sometimes more than a year, to get decisions from servicers on whether a loan can be modified on a long-term basis. Mr. Jakabovics said the program would work better if the government dealt directly with applicants for HAMP and decided which ones qualified, rather than delegating that function to servicers.

But Mr. Jakabovics said he didn’t expect major changes in HAMP, which is scheduled to remain in effect through 2012. “For better or worse,” he said, “what we’ve got now is what we’re going to go with.”

Write to James R. Hagerty at bob.hagerty@wsj.com

More good news for consumers, our members, and the housing market recovery. Following the Senate’s favorable vote yesterday, the U.S. House of Representatives just voted 403 to 12 to extend the home buyer tax credit, expanding the parameters to include existing homeowners and not just first-time buyers. As you may know, C.A.R. and our partners at NAR have worked for months urging Congress and the Senate to extend and expand this crucial piece of legislation. We expect President Obama to sign the legislation in short order.

As it now stands, the federal tax credit will be extended through April 30, 2010, with a 60-day extension if a binding contract is in place prior to the deadline. First-time home buyers will continue to be eligible for a tax credit of up to $8,000, while existing homeowners will be eligible for a reduced credit of up to $6,500. To qualify for the $6,500 credit, existing homeowners must have lived in their current residences for at least five years. The bill also increases the qualifying income limits from $75,000 for single tax filers and $150,000 for joint filers to $125,000 and $225,000, respectively. The purchase price of the home is capped at $800,000 in both instances.

Under additional provisions included in the bill, taxpayers can claim the credit on purchases completed in 2010 on their 2009 income tax returns. The legislation maintains the provision that home buyers do not have to repay the credit provided the home remains their primary residence for 36 months after purchase, and waives this requirement for active duty military personnel who move due to a military order.

Nationwide, more than 1.4 million first-time home buyers were given the opportunity to become homeowners as a result of the Federal Tax Credit for First-time Home Buyers. We expect that number to increase dramatically in the months ahead with this new legislation in place. Thank you to our members who called, wrote, and e-mailed their congressional representatives and voiced their support for the home buyer tax credit. Your voices were heard – today’s vote is a direct result of OUR actions and involvement.

CALIFORNIA ASSOCIATION OF REALTORS®

Senate Bill 306, signed into law this September, changes some of the rules for California real estate short sales . Much of the excitement around this legislation is a revision to Civil Code section 2943 that provides, when an owner/borrower submits to the lender a “short sale request,” the lender is required to accept or decline it within 21 days.

This excitement overlooks what is required by the statute to trigger the lender’s duty to respond quickly. The statute describes a short sale request as a written request that includes;

A. A copy of an existing contract to purchase the property for an amount certain;

B. A copy of the short-pay agreement in the possession of the entitled person.

C. Information related to the release of any other liens on the property, if
any. Item B, the “short pay agreement,” is further defined as an agreement in writing in which the beneficiary agrees to release its lien on a property in return for payment of an amount less than the secured obligation.

It appears that the procedure is as follows:

1. The prospective seller must first have in hand an agreement with the lender
agreeing, in advance, to a short sale. But there is no deadline for the lender to
provide the agreement, nor discussion of whether the agreement specifies how much the lender will accept. On its face, the statute allows the lender to provide the agreement, but not accept a short sale if it is for less that one dollar below the total owed.

2. The owner/borrower the gets a bona fide purchase offer, and makes a short-pay request.

3. The lender then has 21 days to respond, setting forth whether they accept
the existing offer, or specifying the price and terms they would agree to a short sale.

I’m not sure how this will really benefit the consumer as the only adverse effect to the lender is a minimal fine, and there are challenges as to when the time frames truly begin… If you ever worked with a short sale, they don’t always receive everything you send them, packages get lost or placed in the wrong department, etc… however I’m hopeful that this is a step in the right direction…  your thoughts?

]]> http://www.ocrealestateconsultant.com/short-sale-updates/changes-coming-senate-bill-306/feed/ 0 http://www.ocrealestateconsultant.com/short-sale-updates/loan-modification-attorneys-under-investigation/ http://www.ocrealestateconsultant.com/short-sale-updates/loan-modification-attorneys-under-investigation/#comments Tue, 29 Sep 2009 19:09:18 +0000 Jeffrey Simons http://www.ocrealestateconsultant.com/?p=360 Brought to you by the CALIFORNIA ASSOCIATION OF REALTORS®

LOAN MODIFICATION ATTORNEYS UNDER INVESTIGATION The State Bar of California has recently launched numerous investigations against attorneys for misconduct related to loan modifications. In a rare move, the State Bar has released the names of 16 attorneys under investigation, by opting to waive investigation confidentiality in favor of public protection. These attorneys have allegedly taken fees for promised services, but failed to perform those services or even communicate with their clients who face the possible loss of their homes. Their non-attorney staff may also be under investigation for unlawfully practicing law.

Not all attorneys engaged in loan modifications are unscrupulous. However, this announcement from the State Bar serves as a good reminder for REALTORS® and their clients to be careful when dealing with attorneys and others for loan modifications. Scam artists may intentionally associate or affiliate themselves with attorneys in an attempt to lend credence to their fraudulent schemes.

The list of attorneys currently under investigation is available at http://calbar.ca.gov/state/calbar/calbar_generic.jsp?cid=10144&n=96395. C.A.R. provides REALTORS

I’m not going to tell you that I have all the answers and that I know how to get through every situaltion… What I believe would help, would be for entire industry to CHANGE…

Imagine if we all worked together to reach the same results… how great would that feel? You are not alone and don’t need to do this by yourself. I would like to suggest that any agent working on a short sale that hasn’t already taking an advanced training course through your local board, the short sale specialist (SSS), the short sale matrix (SSM), or the Certified Distressed Property Experts (CDPE) please do so…

At the very least… please consider working together with the community to reach a common goal, whether it be getting through the sale faster, helping your seller through a difficult time, working to get the lender through this sale, minimize their loss, and even for your own selfish benefit to get paid sooner… wouldn’t that be nice?

Are you looking for help? Please visit www.CDPE.com now and make a difference for you, your community and your clients!!!

I am very pleased to announce that this Thursday, April 2, C.A.R. will launch a new program designed to provide peace of mind to first-time buyers who are hesitant to enter the housing market due to concerns about potential job loss, and subsequently being unable to meet their monthly mortgage obligations.

Through the C.A.R. Housing Affordability Fund Mortgage Protection Program (C.A.R.H.A.F. MPP), first-time home buyers who lose their jobs due to layoffs may be eligible to receive up to $1,500 per month for up to six months to help make their mortgage payments. A qualified co-buyer also can participate in the program, for a reduced monthly benefit of $750 per month for up to six months in the event of a job loss. Program benefits also include coverage for accidental disability and a $10,000 death benefit. C.A.R.’s Housing Affordability Fund is dedicating $1 million to the program this year, and estimates that as many as 3,000 families will benefit from the program throughout 2009.

To qualify for the Mortgage Protection Program, applicants must:
. Be a first-time home buyer – someone who has not owned a home in the last three years
. Open escrow April 2, 2009, or later, and close on or before Dec. 31, 2009
. Use a California REALTOR® in the transaction
. Purchase the property in California
. Be a W-2 employee (cannot be self-employed or military personnel)

First-time home buyers must request an application for the H.A.F. Mortgage Protection Program from their REALTOR®. For applications and other information on this exciting new program, go to www.car.org/aboutus/hafmainpage/ or contact Monica Rodriguez at (213) 739-8380 or monicar@car.org.

The Mortgage Protection Program is a proactive approach by C.A.R. to address consumers’ concerns about the real estate market and their ability to make their mortgage payments should they loose their jobs. I encourage you to take full advantage of this new program by sharing information about the C.A.R.H.A.F. Mortgage Protection Program with your clients. There is no cost to participate.

Sincerely,

James Liptak
2009 C.A.R. President

WOW!!!  Please let me know if you have any questions, need any additional information or clarification.  I’m always here to help you!